GAZA DISENGAGEMENT UPDATE, AUGUST 4, 2005

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 004820

SIPDIS

E.O. 12958: DECL: 08/03/2015
TAGS: KWBG KPAL PREL ECON EAID IS GAZA DISENGAGEMENT
SUBJECT: GAZA DISENGAGEMENT UPDATE, AUGUST 4, 2005

Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d)

This is a joint message from Embassy Tel Aviv and Consulate
General Jerusalem.


1. (C) Summary: This is the second in a series of regular
reports tracking progress on disengagement coordination
between the GOI and the PA. The IDF will open Karni and Erez
terminals two days a week for Gazans during "lockdown;" the
GOI is considering a trilateral meeting on the passages; VP
Peres suggested locating new cargo scanners on the
Palestinian sides of the Gaza crossings in order to address
Israeli security concerns; QSE Wolfensohn is pressing the GOI
and PA to agree to start Gaza-WB convoys within weeks; the PA
is ready to privatize the operation of the airport under
third party operation; the PA Ministry of Housing and Public
Works has the PA lead on the issue of settlement rubble; and
the Palestine Economic Development Company (PEDC) will manage
agricultural assets post-disengagement and employ Palestinian
laborers currently working in the greenhouses.


2. (C) Summary cont: On humanitarian issues, international
organizations will use Kissufim crossing to bring supplies
into the Gaza Strip during disengagement. On other
disengagement-related issues, the GOI and PA held technical
bilateral meetings August 3 on water, electricity, and
telecommunications; QSE Wolfensohn met Ministers Dahlan and
Mofaz August 3 for a second trilateral meeting; and the PA
will use the Emirati donation of USD 100 million to build new
housing in the soon-to-be evacuated Morag settlement. End
summary.


3. (C) Passages and Trade:

-- The second crossings technical meeting was postponed to
August 4, at the request of the PA delegation.

-- MoD sources told USAID Director that the GOI is
considering a trilateral meeting on the passages following
the August 4 technical bilateral meeting.

-- Vice Premier Peres told the Ambassador August 2 that he
will attend the bilateral GOI-PA technical meeting and raise
the possibility of locating new cargo scanners on the
Palestinian side of the Gaza crossings. In Peres, view,
this will circumvent potential Israeli security concerns on
the operation of the scanners.

-- According to the Israeli MoD, the IDF will open Karni and
Erez terminals two days a week during the period of
"lockdown" prior to and during Israel,s withdrawal, in order
to facilitate the movement of Gazan people and goods.

-- An inter-ministerial GOI team returned this week from a
study tour of U.S. scanner technology and is now considering
contracting a U.S. private firm, such as Northrup-Grummon, to
develop an integrated security-management system for all of
the crossings.

-- COGAT head General Mishlev confirmed August 2 that,
contrary to Israeli media reports, COGAT will maintain
responsibility for permit issuance to Gazans after
disengagement.

-- On the customs union, PA Finance Minister Fayyad told
Consul General August 2 that he believes there is no
compelling reason to change the current customs union and
believes the GOI's purported fears are based mostly on
commercial concerns. Fayyad said that the GOI fears the loss
of the captive Gazan market, but he believes those fears are
not justified since trade patterns do not historically change
quickly. (Full report on this conversation septel.)


4. (C) WB/Gaza Link:

-- On the interim solution to have convoys operate between
the West Bank and Gaza, QSE Wolfensohn is pressing both
parties to agree to start the convoys within weeks, not
months.


5. (C) Movement in the West Bank:

-- COGAT head General Mishlev agreed with USAID Mission
Director August 2 to work on a movement plan for northern
West Bank schoolteachers to get to and from work, enabling
Palestinian students to continue school even while withdrawal
is carried out.


6. (C) Air/Seaports:

-- PA Public Works and Housing Minister Mohamed Shtayyeh told
Consul General August 2 that the PA is ready to privatize the
operation of the airport and have a third party operate it.
He also said the PA is willing to privatize the Palestinian
airline and have a third party operate it as a small regional
carrier with service to Cairo, the Gulf, Larnaca, and Amman.

-- On the seaport, Shtayyeh confirmed that the PA would
construct the seaport at the originally selected location,
despite continued complaints from the World Bank about that
location, and use the evacuated Netsarim settlement as the
"campus" of the seaport.

-- The roll-on roll-off concept for at least one pier of the
seaport continues to be discussed, according to QSE team
members. The World Bank had been pressing a "Ro-Ro" port as
the quickest way to set up a working port in Gaza.


7. (C) Settlement Housing:

-- PA Public Works and Housing Ministry Mohamed Shtayyeh told
Consul General August 2 that his ministry had been mandated
by the PA cabinet to coordinate for the PA the removal of the
rubble and is ready to implement whatever agreement is
concluded. He stressed that the PA hopes to set a precedent
for how to handle future settlement dismantlement.

-- Shtayyeh said that his ministry had created a database of
all of the trucks, bulldozers, and other earthmoving
equipment located in Gaza, both within the public and private
sectors.

-- Shtayyeh also noted that the Italian development agency
and UNIDO had approached the PA and offered to spend USD 2.6
million to purchase the equipment to "mince" the rubble so
that it could be used as a base material in road construction.

-- Shtayyeh noted that his engineers believe that recycled
cement could prove a stronger building material than fresh
cement.


8. (C) Greenhouses:

-- The Palestine Investment Fund registered August 2 the
Palestine Economic Development Company (PEDC) to manage the
agricultural assets post-handover and to employ post-handover
the Palestinian workers currently working in the settlement
greenhouses. Bassil Jaber, former head of the PA's Reform
Coordination Support Unit, was named to head the PEDC.

-- The PEDC plans to manage agricultural assets that remain
standing post-disengagement. It increasingly appears that
USAID and others' attempts to purchase greenhouses from
departing Israeli farmers will not be successful. Every
contact with senior PA officials has confirmed that it would
be too politically damaging if President Abbas were to be
seen as agreeing to, or even acquiescing to, the USG purchase
of these assets.

-- The Deputy Finance Minister Jihad al-Wazir described to
QSE team members eleven teams that will take responsibility
for areas from which the Israelis withdraw. These teams will
be reinforced by local government officials and PLC members
to maintain control and keep order.


9. (C) Humanitarian issues:

-- According to the Israeli MoD, the Red Cross, UNRWA, and
other international organizations will use Kissufim crossing
to bring food and humanitarian supplies into the Gaza Strip
during and immediately following Israel,s withdrawal.
Southern OC Commander Brig. Gen. Kohavi agreed that the IDF
will facilitate movement into and out of Gaza for all
international NGOs and humanitarian workers during this
period.

-- The GOI and PA have reached an agreement to allow 5,000
Gaza Strip residents to be reunited with their family members
in the West Bank. According to the Israeli MoD, PA Civil
Affairs Minister Dahlan is holding off on implementation
until a similar agreement can be reached for West Bank
residents with families in Gaza.


10. (C) Other issues:

-- Israeli Vice Premier Peres told the Ambassador August 2
that the Israeli cabinet will address withdrawal from the
Philadelphi corridor in its August 8 meeting.

-- At its August 7 meeting, the joint PA-GOI security
committee will discuss GOI removal of unexploded mines and
ordnance in the Gaza Strip. General Mishlev said the GOI
team will note that many of the Gaza mines are leftover from
the period of Egypt,s presence in the area.

-- QSE Wolfensohn met with Ministers Dahlan and Mofaz in the
evening of August 3 in Tel Aviv. This was the second
trilateral meeting under the auspices of the QSE.

-- PA Public Works and Housing Ministry Mohamed Shtayyeh told
Consul General August 2 that the PA plans to use the recently
announced USD 100 M donation from the Emiratis for new
housing to be constructed in the soon-to-be-evacuated Morag
settlement, per an initial agreement with the head of the PA
Land Authority Freih Abu Meddein.

-- According to PA Civil Affairs Minister Dahlan in a August
1 written update to QSE Wolfensohn, the GOI
cancelled August 1 bilateral technical meetings scheduled for
later that day on water, electricity, and
telecommunications. Those meetings were rescheduled for
August 3. Palestinian press reported August 3 that the PA
and GOI delegations for these meetings would be headed by
Minister Dahlan and Minister Ramon and Vice Prime Minister
Peres, respectively.

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